Budgeting for a Reverse Mortgage
December 16th, 2009
- New Year Financial Review
- Reverse Mortgage Isn’t a Substitute for Good Financial Habits
- Reverse Mortgages and Medical Debt
- Reverse mortgages and medical costs
- Reverse Mortgages and Health Care Expenses
Reverse mortgages have helped many seniors find the extra income they need to remain in their homes. The income received from a reverse mortgage can go toward household bills, medical expenses, home repairs, transportation, and other financial obligations. But if you decide to get a reverse home mortgage, it’s important to put together a household budget to make your money stretch as far as possible.
Setting up a Budget
Don’t expect a reverse loan to solve all your financial woes if you don’t have a plan for managing your money. Working on a budget can allow you to compare your current income and expenses to see how a reverse mortgage can help. When your expenses are greater than your income, problems can occur, such as having too much credit card debt.
Evaluate your spending habits to see if you need to cut back on certain expenses even before you obtain a reverse loan. Are you spending too much money on entertainment? Do you travel several times a year? Also determine which of your bills are priorities. For example, do you have major medical expenses that you hope to pay for with the proceeds of a reverse loan? Choosing to borrow with a reverse mortgage is a huge step, so it’s important to understand exactly what impact it can have on your finances.
Reverse Mortgage Counseling
Reverse mortgage counseling is required before you can actually apply for a loan. A reverse mortgage counselor can work with you to discuss reverse mortgage pros and cons. The counselor should go through your budget and explain reverse mortgage guidelines. He or she should discuss other alternatives to borrowing money through a reverse loan, such as local assistance programs.
Part of your fact-finding mission should involve comparing different loan offers from reverse mortgage lenders. You can get free no-obligation quotes here.